Uhuru Signs Tax Relief bill

Uhuru signs tax relief bill to cushion Kenyans against Covid-19

The new tax law amends several statutes to cushion the economy and Kenyans against the effects of the Covid-19 pandemic as announced by President Uhuru Kenyatta.

The Amendment Bill which was published on 30^th March 2020 has amended tax-related laws in Kenya including the income Tax ACT (CAP 470) the Value Added Tax Act of 2013, the Excise Duty Act (2015), Miscellaneous Levies and Fees Act (2016) and the Retirement Benefits Act (1997).

The amendments include the rise in the threshold for turnover tax between one million and fifty million shillings so as to exclude small-scale traders from the presumptive tax. The new law further lowers the turnover rate from 3 to 1 percent.

Photo Courtesy: Uhuru Signs Tax Relief bill                                                                                                        

The amendment law which mainly targets low-income earners includes a 100 percent Pay As You Earn (PAYE) tax relief for employees earning less than sh28,000 per month. Those earning above the new threshold will benefit from a PAYE tax reduction of between 30 and 25 percent.

Similarly, the new Act has revised Corporation Tax to 25 percent while Non-resident Tax on Dividends has been adjusted from 10 to 15 percent.

The amended law lowers the Value Added Tax rate from 16 to 14 percent, a move that is expected to lower the shelf prices of basic commodities.

The new Act has amended Section 38 of the Retirement Benefits Act (1997) to allow access to the retirement benefits for purposes of a residential house. This is aimed at increasing homeownership in the country as envisaged in the housing pillar under the Big 4 Agenda.